It is said that 90% of the traders lose money.

With this single statement, trading in stock market gets the negative connotations. Why we do not strive to be among the other 10% ?

There are lawyers who struggle to earn Rs. 1000 per day and there are lawyers who make more than Rs. 1000000 per day. There are doctors with roaring practice and those who keep waiting for the patient visits patiently.

Life is like that.

Success is for the diligent and the deserving.

There are traders ( in fields other than trading) who make profits regularly to earn their livelihood.

The push cart vendor in the image above is selling Vegetables.

He trades in vegetables.

Buys them in whole sale market and sells in retail going door to door. He has developed expertise in sourcing his purchase, pricing his stock and also has regular customers. Based on these skills , he trades profitably everyday.

So does this guy:


This also is a trade.

Here the cost price is very low, effort is high and he is actually selling HAPPINESS for the child whose parents buy the balloon. Price of the end product relates to the value provided.

If one can make such trades profitably, then why not in Trading in Stock Markets.

Yes, it is a good earning method.

But you need to develop the skills required.

( a ) Like the vegetable seller buys at a right price and sells at another right price, you have to develop the skill to find the right entry and exit points for your trade. This is known in stock markets as — Technical Analysis.

(b) The vegetable seller selects good quality vegetables. He is also not carrying only one variety but some selected ones. You have to learn the skills of selecting the right stocks —- Fundamental Analysis. More number of vegetables / stocks is called Diversified Portfolio.

(c) If you happen to go to a market place of vegetable sellers, you are likely to notice one point— The selections are mostly same. Yes, few sellers stock some exotic and out of season vegetables, which are high priced, but generally it is same stock with everyone. This is known as following the trend.

(d) The exotic vegetables do sell at a high price but it is difficult to sell them. But if there is a sudden demand due to some wedding function/ other occasion. great profits are made. Such trades are known as Contrarian Trades.

(e) All other things being similar ( not same), the share market trader has the advantage of not having to go door to door. Stock exchange/ Broker do that for you.One can trade sitting at home. What else you can ask for ?

(f) If the sales of vegetables are slow on one day and some loss occurs, the vegetable seller does not give up. He is again there in the morning buying his stock. For him it is a business. A stock market trader also needs to have the same approach. It is a business.

Stock Market trading must be done in a business like manner and not in an amateurish way. It is not a fun game. The losses and profits are real and they can impact an individual’s life.

Learn the lessons from day to day businesses around you.

Control your fear and manage your greed and you are on the path to successful trading.

This was originally written as a Quora answer to a question. Some changes are made while reproducing the Quora content.

Images : Google Images